Your new car to pinch less

With the festival season round the corner, tough competition among banks and financial institutions has ensured that auto loans get still cheaper.

For instance, in August, Canara Bank, IDBI Bank and ICICI Bank had revised their auto loan rates. Along with State Bank of India's fixed-cum-floating offer in the home and auto segments, Canara Bank is also offering a similar loan facility.

That is, SBI is offering 8 per cent for the first year, 10 per cent for the next two years. Canara Bank is charging 8.5 per cent in the first year, 9 per cent in second year and 10 per cent between third and fifth year. Following this, both ICICI Bank and IDBI Bank too cut their rates.

For a consumer, there are a few things to ponder over. While the rate of interest is the most attractive feature of a loan, other issues such as structure (hybrid or fixed-cum-floating), loan-to-value on offer, tenure or time period and dealers' partners need to be considered as well.

An auto loan seeker, for starters, should approach his/ her bank. A good existing relationship can make things easier. Umesh Arora, head, retail liabilities, Axis Bank, said, "In the auto or personal loan space, an existing customer has a clear advantage. And depending on this, one can even get 0.5 per cent discount. Some banks can also give relaxation towards initial down-payment."

For those who want to scout for a good loan offer, here's some help. Let's first look at the cheapest loan for different tenures. If you are planning to take a loan up to three years, SBI emerges as the best bet. The bank's offer of a fixed rate for three years makes it an attractive proposition. The average yearly rate comes to 8.87 per cent - the lowest.

In terms of equated monthly instalments, a loan of Rs 300,000 for three years would lead to an EMI of Rs 9,400 in the first year and Rs 9,592 in the second and third year. However, a car buyer has to fork out 15 per cent of the total cost as SBI lends only up to 85 per cent of the car's value (on road price) for new as well as second-hand cars.

For loans with tenure of three-seven years, Canara Bank has the best offer. For instance, a car loan of Rs 700,000 for five years would mean that the average rate is 9.2 per cent a year.

The EMI will work out like this - Rs 14,362 for the first year, Rs 14,638 for the second year and Rs 14,712 from third to fifth year. The only drawback - Canara Bank does not provide four-wheeler loans for tenures above six years. The bank funds 90 per cent of a new car's 'on-road' price. For used cars, loans are given only up to 75 per cent of the car's value.

In comparison, ICICI Bank's EMI for the same loan would come to Rs 16,379 at an average rate of 14.25 per cent.

While offers of public sector banks are quite impressive, the process could be time consuming. This is because they follow a centralised loan approval system that leads to delays in sanction and disbursal. Also, they are more stringent as far as the loan-to-value percentage goes.

If you are unable to shell out the required 85-90 per cent, approaching private banks through direct selling agents or dealers help. In fact, some DSAs claim that they can get you a 100 per cent loan on select models. "The customer will need to shell out only the first EMI in advance for some cars such as Maruti Swift," said a DSA for a private bank.

Like mutual fund distributors, both dealers and DSAs normally have partnerships with as many as four-five banks. This helps them get you a better loan-to-value deal or even rates, at times. "As dealers, we need to provide options to customers.

Normally, even before the customer has decided on the model, we spend some time with them to understand the kind of financing he/she will require," said a Mumbai-based Maruti Suzuki dealer.

India, China to make Asia-Pacific largest aviation market

India and China would contribute the most in making the Asia-Pacific region the world's largest aviation market by the year 2028, according to commercial airplane maker Boeing, which expects the region to invest $1.1 trillion in new airplanes over the next 20 years.

As more than 40 per cent of the world's airline traffic will begin, end, or take place within the region, 8,960 new commercial jets valued at approximately $1.1 trillion would be required over the next 20 years, Boeing Commercial Airplanes vice president, marketing, Randy Tinseth, said.

"Strong domestic growth in China, India and other emerging Asian nations will contribute to high demand for single-aisle airplanes. Over the 20-year forecast period, more than half of the deliveries, some 5,600, will be single-aisles," Tinseth said.

The region was not even mentioned in Boeing's earliest market forecasts back in the 1950s. However, between now and 2028, Asia Pacific air travel will grow from 32 per cent of the world market to 41 per cent, making it world's largest aviation market in the next 20 years, Tinseth was quoted as saying in a statement by the city-based company.

Airlines would switch to more efficient mid-size twins and even larger single-aisle jets, with airlines in the region expected to take delivery of 2,590 twin-aisle airplanes.

The region covers a broad area including Japan, Korea, China, Australia and India and currently accounts for more than 8,300 flights and 1.2 million travellers daily. Travel in the region is expected to grow at an average annual rate of 6.5 per cent over the next 20 years.

Going forward, the growing Asian markets would lead the industry into recovery from the current 'difficult time' the sector is facing, Boeing said.

The Asia Pacific fleet will nearly triple from 3,910 to a total of 11,170 airplanes. More than 80 per cent of this demand would be for growth.

Delivery of new, more fuel-efficient airplanes ensures the region's fleets would remain among the youngest in the world, it said.

Boeing's projection also shows the Asia Pacific region as a growth leader in the long-term global air cargo market, with routes within China, within Asia and those connecting Asia to other regions outpacing the global average growth annual rate of 5.4 per cent over the next 20 years.

Asian carriers would add about 750 freighters to the region's fleet to accommodate growth and airplane retirements, about 27 per cent of the world requirement -- second only to the more mature, but slower growing, North American market, Boeing added.

India and China would contribute the most in making the Asia-Pacific region the world's largest aviation market by the year 2028, according to commercial airplane maker Boeing, which expects the region to invest $1.1 trillion in new airplanes over the next 20 years.

As more than 40 per cent of the world's airline traffic will begin, end, or take place within the region, 8,960 new commercial jets valued at approximately $1.1 trillion would be required over the next 20 years, Boeing Commercial Airplanes vice president, marketing, Randy Tinseth, said.

"Strong domestic growth in China, India and other emerging Asian nations will contribute to high demand for single-aisle airplanes. Over the 20-year forecast period, more than half of the deliveries, some 5,600, will be single-aisles," Tinseth said.

The region was not even mentioned in Boeing's earliest market forecasts back in the 1950s. However, between now and 2028, Asia Pacific air travel will grow from 32 per cent of the world market to 41 per cent, making it world's largest aviation market in the next 20 years, Tinseth was quoted as saying in a statement by the city-based company.

Airlines would switch to more efficient mid-size twins and even larger single-aisle jets, with airlines in the region expected to take delivery of 2,590 twin-aisle airplanes.

The region covers a broad area including Japan, Korea, China, Australia and India and currently accounts for more than 8,300 flights and 1.2 million travellers daily. Travel in the region is expected to grow at an average annual rate of 6.5 per cent over the next 20 years.

Going forward, the growing Asian markets would lead the industry into recovery from the current 'difficult time' the sector is facing, Boeing said.

The Asia Pacific fleet will nearly triple from 3,910 to a total of 11,170 airplanes. More than 80 per cent of this demand would be for growth.

Delivery of new, more fuel-efficient airplanes ensures the region's fleets would remain among the youngest in the world, it said.

Boeing's projection also shows the Asia Pacific region as a growth leader in the long-term global air cargo market, with routes within China, within Asia and those connecting Asia to other regions outpacing the global average growth annual rate of 5.4 per cent over the next 20 years.

Asian carriers would add about 750 freighters to the region's fleet to accommodate growth and airplane retirements, about 27 per cent of the world requirement -- second only to the more mature, but slower growing, North American market, Boeing added.

Via : PTI

Exports dip for the 11 consecutive month

India's exports slid for the 11th straight month in August by 19.7 per cent to $14.3 billion owing to the continuing slump in global demand. In August 2008, the exports were $17.8 billion.

In April-August this fiscal, the overseas shipment contracted by 31.3 per cent to $63.9 billion from $93.1 billion in the same period last year.

For the first five month of 2009-10, three sectors -- rice, tobacco and fruits and vegetables -- have shown positive growth, commerce secretary Rahul Khullar said.

Only in August, segments like rice, tobacco, fruits and vegetable, marine products, iron ore, man-made yarn and fabrics, some minerals, like coal, and ready made garments have shown positive growth, Khullar told reporters.

"Sectors which continue to be in deep trouble are leather, gems and jewellery, drugs and pharmaceuticals both in monthly and cumulatively for the last five months," he said.

The exports of gems and jewellery in August dipped to $2.2 billion from $2.9 billion in last year.

In April-August this fiscal, the gems and jewellery exports contracted to $9.7 billion from $14.6 billion in April-August last fiscal.

Leather exports in the month under review declined to $0.28 billion from $0.35 billion in the same month last year.

Engineering goods exports dropped to $2.6 billion from $3.8 billion.

In April-August this fiscal engineering goods shipment shrank to $13.1 billion from $19.8 billion, Khullar said.

Kamal Nath to meet World Bank chief, address US investors

To attract foreign investmment in the road sector, Road Transport and Highways Minister Kamal Nath will meet the World Bank chief and address an investors round table during his seven-day US visit beginning on Friday.

The ministry is also holding a road show aimed at projecting investment opportunities in the sector.

"The transport minister will meet the World Bank chief Robert Zoellick besides attending a round table meet with financial sector companies during his US visit. He will also address an investors round table," a government official said.

The visit is significant as the ministry is scouting investment of $70 billion for road construction in the next 3-4 years, out of which about $45 billion is expected to come from the private sector, including $10 billion from foreign investors.

The ministry has envisaged mega projects in the road sector with each 500-km project costing about $1 billion, where foreign investment would be vital, the official added.

Nath had earlier participated in two road shows - one in Singapore and another in London after taking charge of the ministry in May.

He has announced building 7,000 km of road network every year, taking the overall target to 35,000 km in the next five years.

Will G20 summit offer more for emerging nations?

Finance Minister Pranab Mukherjee has reason to feel satisfied with the outcome of the meeting of finance ministers and central bank governors of the G20 countries, in London last week.

India's role in breaking the deadlock over the Doha round of trade talks came in for appreciation as the gathered ministers renewed their call for an end to all forms of protectionism and an early conclusion of the ongoing multilateral trade negotiations. Importantly, there was agreement on increased representation and voting rights for emerging economies in the International Monetary Fund and the World Bank.

There was also a reaffirmation of the commitment to increase accountability, strengthen the involvement of governors at the IMF in strategic oversight, and move to an open, transparent and merit-based selection of top management positions in the two Bretton Woods institutions.

More significantly, stress was laid on candid, even-handed and independent surveillance of all the major economies, to ensure a more sustainable global economy and a well-functioning international financial system.

India's "quota" (share of capital) in the IMF and the corresponding voting rights will go up a few notches, reflecting more appropriately its current share in the global economy (China's will go up by more, naturally).

With the commitment to usher in a transparent and merit-based selection of the top management of the IMF and the World Bank, the US and the European Union should no longer be able to monopolise these jobs.

Similarly, independent and even-handed surveillance should ensure that the developed economies too come under scrutiny by these institutions - though how effective this will be remains to be seen, especially if these countries have no intention of borrowing from the Fund.

Still, this formal recognition of the absence of such scrutiny in the past, identified as one of the factors that fuelled unbridled growth in imprudent financial innovations by investment banks in the US and Europe, is welcome.

Going by the progress report on the promises made at earlier meetings and the communique issued last week in London, the Pittsburgh summit of the G20, scheduled for later this month, may well see some action to implement these proposals.

With respect to the higher quota in the IMF for developing economies like India, a key question will be whether it manages to reduce the US voting percentage sufficiently to remove its virtual veto in the Fund and Bank.

The Pittsburgh summit could determine the timing of a calibrated winding down of public spending, now that the signs of a global economic recovery are evident.

While some developed countries like France and Germany want the G20 to start discussing "exit strategies" to scale back public spending, India along with other BRIC countries have opposed any premature winding down of financial support, arguing that the scale and time-frame of any such exit strategy should vary from country to country - a perspective that seems somewhat obvious.

This view received the endorsement of the finance ministers of the G20 countries in London last week.

Soon: A robot controlled by human brain cells!

British scientists are on track to develop a new robot which they claim will be controlled by a blob of human brain cells.

According to the New Scientist, a team at Reading University, which has already used rat brain cells to steer a simple-wheeled robot, is now trying the same thing with human brain cells.

In fact, for the robot with rat brain cells, 300,000 rodent neurons grown in a nutrient broth and producing spikes of electrical activity were connected to output of the robot's distance sensors. The neurons proved capable of steering the robot around a small enclosure.

According to the scientists, observing how the neuron culture responds to stimulation can improve the understanding of neurological conditions such as epilepsy.

To make the system a better model of human disease, a culture of human neurons will be connected to the robot once the current work with rat cells is completed. This will be the first instance of human cells being used to control a robot.

One aim is to investigate any differences in the behaviour of robots controlled by rat and human neurons. "We'll be trying to find out if the learning aspects and memory appear to be similar," said team leader Kevin Warwick.

The scientists can proceed as soon as they are ready, as they won't need specific ethical approval to use a human neuron cell line. That's because the cultures are available to buy and "the ethical side of sourcing is done by the company from whom they are purchased", team member Ben Whalley said.

We have pulled economy back from the brink: Obama

US President Barack Obama said the "bold and decisive" steps taken by his administration after inauguration has pulled America's economy back from the brink.

"Thanks to the bold and decisive action we have taken since January, I can stand here with confidence and say that we have pulled this economy back from the brink," Obama told lawmakers in a joint address to the US Congress wherein he passionately called for health care reforms.

"When I spoke here last winter, this nation was facing the worst economic crisis since the Great Depression.  We were losing an average of 700,000 jobs per month. Credit was frozen. And our financial system was on the verge of collapse," Obama said as he opened his speech.

Admitting that a full and vibrant recovery was still many months away, the President vowed to continue with the steps to strengthen the economy.

"I will not let up until those Americans who seek jobs can find them; until those businesses that seek capital and credit can thrive; until all responsible homeowners can stay in their homes. That is our ultimate goal," Obama said.

And this has been achieved due to support from the US Congress in last several months, and especially those who have taken the difficult votes that have put us on a path to recovery, he added.

Why the city gas distribution is in a mess

Snarled in spats with established players and legal cases, the gas regulator has done little to streamline the process of expanding city gas networks, writes Latha Jishnu.

Seldom have the ironies been as bizarre as in the case of city gas distribution (CGD) in the country. Long established CGD companies authorised by the government - and in some cases owned by it - have been at the receiving end of the regulator's wrath while illegal entities have been allowed to continue with their squatting operations.

Instead of the network expanding in a significant way, no new projects have come up in the last two years; on the other hand, expansion of existing projects was brought to a standstill for long periods although authorisations are now being accepted in some cases. This has been the paradox of regulation of the downstream gas sector.

With the courts entering the picture, the prospects of expanding the CGD network in the near future appear rather remote.

This is because the functioning of the Petroleum and Natural Gas Regulatory Board (PNGRB) and its powers to license CGD companies has been challenged twice over - in a public interest litigation filed by a voluntary organisation and in a writ petition filed by a Supreme Court-mandated company.

Both cases have been clubbed together by the Delhi High Court which is hearing the cases but the outcome seems a foregone conclusion since the government has admitted to the court that the regulator does not, indeed, have the power to issue any CGD authorisation!

The supreme irony is that the key Section 16 of the PNGRB Act of 2006 that gives it powers of authorisation has not been notified so far.

How did things go so wrong on CGD? According to some analysts, the mess is entirely the making of the board which took a pugnacious stand on existing CGD entities - these include municipalities in Gujarat, public sector undertakings, joint ventures and private companies - some of which have been in operation for several decades.

Almost from the word go, the five-member PNGRB, set up in October 2007, had expended much of its energies last year in questioning the authorisation given by the government to the handful of existing entities, specially the Delhi-based Indraprastha Gas Ltd (IGL).

This not only delayed the expansion of CGD network but also stymied expansion of operations in the National Capital Region (NCR) where a critical Supreme Court's directive to supply clean fuel to automobiles in the heavily polluted zone has been put on hold because of its injunctions against IGL.

The NCR imbroglio is a telling example of the PNGRB's approach to CGD authorisation. IGL was set up in 1998 as a joint venture of the state-owned GAIL India, the public sector BPCL and the government of Delhi under a Supreme Court directive to clean up the heavily polluted NCR.

This did not cut any ice with board which refused to let IGL proceed with expansion in Delhi initially and later in the NCR. Matters came to a head when the board included Ghaziabad, which forms part of NCR, in the list of seven cities put up for CGD bids in its second tranche.

The insistence of board - sources say it was the decision of the chairman - to put Ghaziabad to bid when IGL's application for authorisation was pending with the PNGRB was all of a piece with its way of functioning.

As industry saw it, IGL's application was a mere formality since it had been working in Ghaziabad since 2002 and had already invested Rs 12 crore (Rs 120 million)  in the city for setting up two CNG stations and related infrastructure.

The clincher in this case is that IGL has been working under the direction of the Environment Pollution Control Authority (EPCA) which reports to the apex court on pollution mitigation measures undertaken in the NCR and is in the process of laying pipelines and setting up another CNG station.

A listed company, IGL is scheduled to spend Rs 76 crore (Rs 760 million)  this financial year and has drawn up plans for investment of Rs 300 crore (Rs 3 billion) over the next three years.

An outraged IGL has pointed out in its writ petition that the bid for Ghaziabad was called for even while the PNGRB was hearing its application for authorisation as the incumbent operator.

Those familiar with the travails of setting up CGD networks point out that the board has shown little understanding of the problems of establishing such a business where getting land and a multitude of required local clearances take several years.

The importance of Ghaziabad is that it is far by the most promising location as responses to the PNGRB tender have revealed. It is a highly industrialised hub and investors expect to make handsome gains from supplying the industrial and commercial segment rather than from supplying domestic consumers or providing CNG for automobiles.

So say industry insiders who point out that the board does not regulate marketing margins, leaving the investors free to charge their own rates. According to some credit rating agencies, the rate of return on capital employed can be as high as 20 per cent if companies leverage their financing ratios astutely.

This would explain the scramble for Ghaziabad which has the largest number of contenders, including big oil companies (IOC and HPCL and the omnipresent GAIL Gas which bids for all cities except those which Reliance Gas, a subsidiary of Reliance Industries, is angling for.  

MORE ATTRACTIVE IN THE SECOND ROUND
Geographical Area	No of bids	Contenders
Allahabad	2	IOC-Adani Energy (JV), GAIL Gas
Chandigarh	4	GAIL Gas, Hindustan Petroleum Corp (HPCL), Gujarat State Petronet (GSPL), IOC-Adani Energy
Ghaziabad	6	Indraprastha Gas (IGL), GSPL, GAIL Gas, HPCL, IOC-Adani Energy, Siti Energy
Jhansi*	1	GAIL Gas
Rajahmundry	3	Bhagyanagar Gas, Reliance Gas, IOC-Adani Energy
Shadol*	1	Reliance Gas
Yanam*	1	Reliance Gas
Since only single bids were received for these areas the date for submission of bids was extended

The surprise in the pack is Siti Energy, a little known outfit part-owned by a company floated by the Zee TV group. Siti's bid is interesting primarily because it throws light on the functioning of the board. Although the company has shown assets of just Rs 2 crore (Rs 20 million) against the stipulated net worth of Rs 150 crore for Ghaziabad bidders, some members of the board, it is learned, were keen to qualify the company ''in the interests of fostering competition".

The company is seeking to include family jewellery and other assets like stocks to boost its net worth. However, strenuous objections from one of the members have forced the board to seek a legal opinion on the matter.

Ghaziabad is just one example of how the board's handling of CGD projects is leading to problems all round. In June, the EPCA chairman Bhure Lal had written to Oil and Gas Minister Murli Deora warning that the regulator's move would lead to more delays and jeopardise the work of pollution control in the NCR where a phenomenal 1.2 million vehicles ply daily.

The letter had prompted Deora to ask the board to draw up a clear road map for rolling out CGD projects in a big way, specially since gas supplies are expected to be plentiful in coming months.

PNGRB's target for setting up a CGD network across the country has been as ambitious as it has been elusive. A schedule unveiled last December had set a target of covering 86 towns and cities with a population of 100 million by 2011.

So far, letters of intent have been issued for just six cities tendered in the first tranche, leaving the CGD map woefully sparse: India has just a dozen odd urban centres that have been in the CGD network for decades compared with well over a 1,000 in Pakistan.

The picture is unlikely to improve soon because of the legal tangle. Whatever the Delhi High Court decides, it is time the regulator took a look at its record on expanding the CGD network and cleared the blockages, specially attitudinal.

Stay invested in Ulips for full benefit

Last month, the Insurance Regulatory and Development Authority announced a slew of measures to make unit-linked insurance plans more attractive for policyholders from October 1.

These included capping the difference between net and gross yields at 3 per cent, limiting fund management charges at 1.35 per cent and withdrawing the surrender charge for exits after four years.

"Earlier, in the absence of any guidelines on the illustration shown at the point of sale, insurers used to charge according to their expenses. As a result, policyholders were unaware of the different costs," said a senior executive of Life Insurance Corporation of India. With these changes, the regulator has made Ulips more attractive.

However, policyholders will have to stay invested for the entire period of the scheme to get these benefits.

Let's see how the changes will work. From October 1, insurers will give a benefit illustration of net and gross yields at 7 per cent and 10 per cent, respectively, as against an illustration of 6 per cent and 10 per cent, respectively, at present.

Therefore, the yield for policyholders has risen 1 per cent. To manage this, insurers will have to control their distributor/agent costs and fund management fees.

Further, by withdrawing surrender charges from fifth year onwards, Irda has given policyholders an option to exit if they are unhappy with the insurer or need funds.

If a policyholder wants to exit in the interim period of the policy term, he should remember that he will not be able to take advantage of the new guidelines.

"If an investor withdraws partially, does not pay the premium on time or switches funds frequently, he will not get good returns," said GLN Sarma, chief actuary, Bharti Axa Life Insurance Company.

According to him, Ulips do not come with guarantees. Also, returns are totally dependent on the performance of the fund. And while policyholders are allowed three to four free switches between various fund options (which include various combinations of debt and equity), moving your money too often can hit returns.

And while 10 per cent of the gross yield has to give net returns of 7 per cent, according to the new guidelines, any improvement in performance may not lead to an exact 3 per cent differential. This is because the fund management fees may go up in case the scheme performs better. So, a 15 per cent gross yield could mean 10-11 per cent returns.

The main benefit will be an increase in corpus. "While the new guidelines may not guarantee any substantial hike in returns, they will definitely increase the investible amount and possibly the returns as well," said the LIC executive.

But remember, it will be over a long period. This is because of the high costs involved in the initial years. And there are good chances that many of these, like distributor/agent cost, will continue to remain high.

But after third or fourth year, these costs will fall substantially, leading to a higher investible corpus. This, in turn, will lead to increase in returns. That is, what an investor loses out in the initial years will be made up to ensure that the difference between gross and net yields is 3 per cent.

A person who wishes to exit after the initial four years stands to lose. This is because most of the premium in these years will go towards premium allocation charges and other costs.

Inflation rises to (-)0.12%

Inflation rose marginally to minus 0.12 per cent for the week ended August 29 from minus 0.21 per cent in the previous week due to a rise in prices of food and other household items.

The wholesale price index-based inflation remained negative for the 13th consecutive week primarily on high base.

Inflation turned negative for the first time in the week ending June 6.

Inflation in the corresponding week last year was 12.38 per cent.

Prices of fruits, vegetables and milk rose by 1 per cent each while eggs became expensive by 4 per cent, sea fish was dearer by 2 per cent and soyabean oil rose 3 per cent.

Among the household items, laundry soaps became expensive by 35 per cent, detergents by 17 per cent and toilet soap and toothpaste by 6 per cent each.

However, the prices of jowar, masur and gram declined by a per cent each while linseed was cheaper by 6 per cent and sunflower by 4 per cent.

Salt was cheaper by 4 per cent, while prices of sugar and cotton seed oil declined by one per cent each.

Among manufactured items, prices of ferro manganese dipped as much as 53 per cent, while cement and bicycle prices declined by one per cent.

Fuel and power remained unchanged at the previous week's level.

The wholesale price index for the week ended July 4 was revised upwards to 0.75 per cent from the provisional estimate of minus 1.21 per cent.

The essence of rural job scheme

The National Rural Employment Guarantee Scheme (NREGS) was launched by the previous United Progressive Alliance (UPA) government in the first flush of its commitment to the 'Aam Aadmi' agenda.

Criticised by many for a variety of reasons, from fiscal burden to the prospect of leakages, it nevertheless became the UPA's defining and differentiating programme. Many people, inside and outside the alliance, gave it significant credit for playing a part in the UPA's re-election and, since it was closely associated with Sonia Gandhi, for strengthening the Congress's position.

The Union Budget for 2009-10 provided a significant increment of Rs 39,000 crore (Rs 390 billion) based on the government's intent to expand the scale and coverage of the scheme. But, parallel to these good intentions, the political saleability of the programme seems to be tempting people to milk it for all that it is worth.

Unchecked, this may end up destroying the fundamental merits of the scheme, with some unfortunate consequences for labour markets throughout the country.

The temptation is manifest in efforts to expand eligibility from one adult per household to an unlimited number as well as to set the daily wage to a uniform Rs 100 per day. It is well-known that rural wages differ enormously across the country and the first version of the NREGS took this into account by setting state-specific daily rates.

In many states, Rs 100 per day, particularly if more than one member of each household can get it, will prove to be significantly higher than the market wage, which means that many people will withdraw from the labour market to claim the scheme's benefits.

This argument does not ratify the objection that many farm and industry lobbies have raised to the scheme: that it raises their wage costs unbearably. All of them ought to be paying at least the minimum wage to all their workers, which the earlier version of the NREGS would have ensured.

However, if the scheme itself causes a significant distortion in the market, then the withdrawal of labour from the market could pose a threat to commercial viability of both agriculture and industry. Further, with bloated enrolment, costs and consequently, the fiscal burden will dramatically increase.

In its essence, the NREGS is a pragmatic and entirely justifiable safety net that guarantees subsistence without distorting labour markets by respecting regional differences in the minimum wage.

Its effectiveness lies in the self-selecting nature of its beneficiaries; only those who are on the verge of destitution would have an incentive to enrol. It should not be converted into a general feeding trough, attractive enough for even relatively better-off families to take advantage of, which will both distort its targeting of the truly deserving and raise costs.

Via : BS

How ISI masterminds fake currency racket in India

India's fake currency problem gets bigger and bigger.

So dependant are Pakistan-based terror outfits on fake currency they recently stole a secret template India used to print its currency.

The Central Bureau of Investigation is currently probing the theft with the help of the Directorate of Revenue Intelligence, the Reserve Bank of India and the Central Forensic Science Laboratory.

The CBI and sources in the Intelligence Bureau say certain security features of the template were stolen to enable the printing of Rs 1,000 and Rs 500 currency notes. The investgators are certain that the theft has the fingerprints of the Pakistan military's Inter Services Intelligence directorate.

Sources told that the ISI relies on local gangs to undertake such assignments. IB sources say they are also probing if fugitive gangster Dawood Ibrahim's henchmen were involved in the crime.

Investigating agencies also do not rule out in-house involvement. They suspect the ISI's Indian contacts penetrated the establishments responsible for printing currency and obtained information.
Preliminary investigations have revealed that the ISI wanted to make the fake Indian currency look authentic. Earlier, Indian security agencies easily spotted the fake currency. Hence, investigators claim the ISI's dirty tricks division felt it was necessary to produce Indian currency to near perfection.

IB sources say the operation to steal the security features of Indian currency was two years in the making.

After stealing the template, the manufacturers of the fake currency also changed the quality of paper used for printing. Earlier, they used paper manufactured in Pakistan out of wood pulp. Today, the paper is imported from abroad and resembles the paper India uses in its currency.

IB reports allege that the ISI convinced the Pakistan government to import the currency standard printing paper, which the ISI diverted towards printing fake currency.

Indian intelligence sources point out that some Pakistan officials are aware of these activities since much of the fake currency is printed at government presses in Quetta, Lahore and Peshawar.

Once the notes are printed, the ISI transports them to Nepal, Bangladesh and Sri Lanka. Agents hand over the notes to individuals who smuggle them into India where it is exchanged on a 2:1 basis. That is, two fake rupees are exchanged for one genuine rupee.

The interrogation of a gang arrested recently in Uttar Pradesh revealed that most of the fake currency is being brought into India through Nepal. Women are often used to transport the notes to lower suspicion at border checkpoints.

Investigators say the thread in the freshly printed fake currency notes are no longer hazy; the watermarks, the Ashoka Pillar, Mahatma Gandhi's image, the denomination and the RBI mark are more prominent.

The sprinkled dots are harder to identify when held against ultra violet light; also, the new fake notes ensure better visibility of the superimposed digit when held horizontally.

The biggest problem the ISI faced before the template was stolen was the size of the series prefix. However, with the template in its possession, the agency has fixed this problem -- the alignment of the series prefix has been placed in a correct line.

Some Indian observers estimate the fake currency in circulation at Rs 169,000 crore (Rs 169 trillion), a figure the RBI denies.

Apart from funding terror operations in India, the fake money is used in real estate transactions.

The fake money has also entered the banking system. Investigators say an individual who wants to deposit fake currency will ensure that s/he does so when there is a crowd at the teller's desk. Since the teller is too busy to check every note, the fake currency gets deposited, and into the Indian banking system.

The National Crime Record Bureau states that 1,170 cases of fake currency were registered last year, a decline from the 2,204 cases registered in 2007.

In the past year Rs 3.63 crores (Rs 36.3 million) in fake currency has been seized.

The CBI is investigating 13 cases pertaining to fake currency. All 13 cases have international ramifications involving the ISI.

Via : REDIFF

Fake currency: 'RBI, banks in denial mode'

Some observers believe counterfeit currency worth Rs 169,000 crores (Rs 169 trillion) is in circulation in the country.

Pakistan's Inter-Service Intelligence directorate is allegedly a key player in this menace, thwarting attempts by Indian security agencies to crack down on the racket.

Former Central Bureau of Investigation director Joginder Singh tells how the security agencies could tackle the fake currency phenomenon.

Do you think India is doing enough to curb the threat of counterfeit currency?

It is not enough at all. More should be done to eradicate the danger.

What should be done in your opinion?

First, the approach has to change. The government, banks and the Reserve Bank of India are all in denial mode when dealing with the issue. That attitude has to change.

The problem is immense and threatens the economy. Instead of remaining in denial, the agencies should wake up, accept the problem and act.

What should the RBI do?

They need to first accept the problem. Only then will they be able to solve it. The RBI obviously gets to know when an entire series of currency notes has been faked. I fail to understand why they continue with the series despite it being faked.

The RBI should immediately withdraw the series once such things happen. That solves the problem to a great extent.

What should banks do?

What we have been noticing is that once a customer reports fake currency, the bank immediately destroys the note and there ends the matter. First, the banks ought to file a police complaint.

Let me tell you about a case where a man drew his salary from an ATM. It was only later that he realised all the notes were counterfeit. Banks should introduce testing machines at ATMs so that the customer can immediately report the problem.

What can the police do?

They should stop torturing the person who reports the crime. All police units of the respective states ought to follow the Bengaluru module where there are separate units for law and order and crime. The crime wing of the police should handle this matter.

I feel that special training ought to be imparted to officers and two constables should be put on duty only to tackle this problem.

What about the government?

I fail to understand why we can't manufacture ink and paper to make currency. It is still being imported and this gives criminals an edge.

If we manufacture our own ink and paper, then we will be in control of the situation and can enhance our security features.

Besides, it is time the government accepted that we face a serious problem.

Could you provide a set of guidelines to tackle the issue?

The law must be changed to protect those who complain about the problem. Agencies should get out of denial mode.

The Intelligence Bureau says the ISI imports paper from London to fake currency notes. Can't we seek help from the United Kingdom?

It is difficult. Why would they help us? For them, it is a business. We have to find our own means to tackle our issues.
Fake currency is directly connected to terrorism.

It is connected to terrorism. To wipe out terrorism, we first need to stop pleading with the United States of America. India should realise that they will not bother about us.

Giving the army blanket powers to deal with the problem is the only way to solve this problem.

Can Interpol's help be sought?

Again, there is no point in asking Interpol. Interpol is basically a group of police officers.

If we seek Pakistan's help, then we will be dealing with their Interpol chief who is also the chief of the FIA (Federal Intelligence Agency). Do you expect anything from him?

Jet cancels 198 flights on third day; deadlock continues

Jet Airways on Thursday cancelled nearly 200 domestic and international flights as its pilots continued their agitation to protest sacking of two of their colleagues.

"The situation continues ... there are no talks so far. We have not got any invite from the management side showing their willingness to talk to us," Capt Sam Thomas, Joint General Secretary of National Aviators Guild, which is spearheading the agitation, told PTI.

He claimed that overall 500 pilots have reported sick.

A spokesperson of the airlines said it has cancelled 163 domestic and 35 international flights as 400 of its over 1000 pilots did not report for duty.

To deal with the situation, the airline has set up a crisis management centre which is continuously monitoring the situation.

At the crisis centre, a team of 15 personnel from planning, revenue management and PR is working round-the-clock to reschedule various flights and monitor the situation, the airline said.

The airline operates 75 international flights and 300 domestic flights on a normal day.

Fares soar as airlines chip in to help Jet

Airlines like Air India, Kingfisher, IndiGo and SpiceJet are picking up Jet passengers from grounded flights and the airline has also worked out inter-airline payment adjustments so that passengers do not have to pay extra for flights redirected to other airlines.

Fares available on the net, however, shot up 50 to 100 per cent during peak hours owing to the sudden reduction of capacity due to cancelled flights.

"Except for Air India, low-cost carriers have raised fares 50 per cent and full-service carriers by around 100 per cent," confirmed Mohit Srivastava, head of online sales, MakemyTrip.com, an online portal.

On a Delhi-Bangalore route, Kingfisher normally charges Rs 6,000 (one way). The fare today rose to Rs 12,500. Low-cost carriers have upped Delhi-Bangalore ticket prices from Rs 3,000 to Rs 4,500, according to makemytrip data (see table).

HIGH FLIERS Peak time ticket rates from Delhi [ Images ] to Bangalore
Airline	Price earlier	Price now
Kingfisher	6,000	12,500
Go Air	3,000	4,500
Air India	6,000	6,000
SpiceJet	3,179	NA
IndiGo	3,179	NA
Amount in Rs                NA: Tickets not available

Sources in Kingfisher admitted that the Vijay Mallya-owned airline was getting 100 per cent passenger load factor in the business class currently instead of the average of 50 per cent. Air India saw passenger load factor increase from 60 per cent to 74 per cent on Wednesday.

Significantly, both full-service and low-cost carriers have strongly supported Jet chief Naresh Goyal.

"We cannot tolerate labour terrorism by employees who get salaries above Rs 400,000 a month," said a senior executive of a leading private airline, adding, "Also, at a time of recession for the industry we are concerned that the pilots' attitude might spread to other airlines too. At this moment everyone has to make sacrifices."

"Goyal has not budged an inch and that is the right way. We fully support his moves. I don't see the pilots getting support from any other employees who distrust them," added a CEO of a low-cost carrier.

National Aviator's Guild's joint secretary Captain Sam Thomas, however, made it clear that the mass leave move will continue till their demands of reinstating all the pilots sacked is met.

Jet Airways has a 26.3 per cent - 18.9 per cent of Jet Airways and 7.4 per cent of JetLite - share of the domestic passenger market that carries 100,000 passengers a day.